NEW YORK — AIG, the insurance giant bailed out by the federal government, reported net income of $1.45 billion for the first quarter as its struggling insurance business showed signs of improvement.

The company also said Friday that recovering credit markets and ongoing efforts to streamline its operations contributed to improved performance.

American International Group, which received more than $180 billion in aid from the government during the financial crisis, said premiums in its primary insurance division fell 1.1 percent in the first quarter. That was the smallest decline over the past four quarters.

The $7.64 billion in new premiums written during the quarter was up 10 percent from the fourth quarter.

Shares of AIG surged $1.95, or 5.3 percent, to $38.70, even as the broader market fell.

Despite the improvement, AIG remained cautious about generating new business in its Chartis insurance unit, saying new business continues to be affected by “challenging economic conditions.”

Len Blum, a managing partner at investment bank Westwood Capital, said, “once they pay back the government, how are they going to make money?”

Chartis earned $879 million during the first quarter, but a big chunk of that profit came from investment income, not new business. It recorded $481 million in charges tied to paying claims, including the earthquake in Chile.

One of AIG’s most profitable units in the past, its aircraft leasing unit, reported an operating loss of $56 million during the first quarter. The unit, called International Lease Finance, said last month it would sell a portfolio of planes. The unit’s loss was tied to an impairment charge on some aircraft ahead of the sale.

Investors want to see a rebound in AIG’s ability to generate new business because once it has sold noncore assets, the insurer will have to rely on traditional insurance underwriting to repay the rest of its government loan.

The amount of outstanding government assistance actually rose by 4 percent during the first quarter to $134.21 billion.

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